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RealTime IT News

Disney's SEEK Goes, AltaVista & Gateway Buy More Net

Dealmaking fever drives the value of unique users up a blended 12% since February 17 as some of the mergermania begins to bear fruit. Case in point: the new Mickey Mouse Club, headed up by Infoseek.

If you're Disney the answer to "what are you going to do now" is not "go to Disneyland," it's Go.com. Despite critics (myself included), the new thrill ride on the Web debuts in the number four slot. Two of the top 10 Web sites in the world now are effectively run by "old media" giants.

For those who were asleep when Disney acquired its 43% stake in Infoseek (NASDAQ:SEEK) to create Go.com, the marriage finally consummated, and now Disney's ABC TV runs never-ending URL promos on every network ID. The next step we suggest is changing the name of Infoseek to Go.com. Go with the new brand. Keep Infoseek as the licensing brand for search.

In the top 10 the urge to merge drives deals with 6 of the 10 merging with each other or another firm.

Notable also in the new WEBDEX is the dominance of AOL.com's (NYSE:AOL) consolidated sites. We valued only AOL.com and not the online service. Nothing comes close to its 38 million users, and Netscape hasn't been rolled into that number yet either (the two are merging).

Eight million eyeball pairs away is Microsoft (NASDAQ:MSFT). That's a big gap between the first and second slots, or a big space between the eyes. Third and fourth -- Yahoo! (NASDAQ:YHOO) and Lycos (NASDAQ:LCOS) -- nip at Microsoft.com's heels in overall users.

Yahoo! snatching up GeoCities adds to its bulk, but the combined numbers aren't showing in Media Metrix's numbers yet.

Meanwhile, the jury's out on whether Lycos should merge with USA Networks' Web assets and TicketMaster Online-Citysearch (NASDAQ:TMCS). LCOS is not trading at its pre-deal announcement levels by any means.

Excite (NASDAQ:XCIT) is in mating ritual phase with @Home (NASDAQ:ATHM) in a proposed merger.

Internet.com's January Feb 17 Feb 24 Feb 17 Feb 24 Percent
WEBDEX Users Market cap or PMV* Market cap or PMV* User User change
  (millions) (millions) (millions) Value Value  
AOL.com* 38.0 $7,100 $8,250 $187 $217 16.2%
Microsoft.com* 30.1 $8,400 $8,750 $279 $290 4.2%
Yahoo 29.5 $25,586 $29,664 $867 $1,006 15.9%
Lycos 28.5 $3,755 $3,886 $132 $136 3.5%
GO Network (SEEK) 22.8 $3,652 $4,331 $160 $190 18.6%
GeoCities 19.3 $2,579 $2,961 $134 $154 14.8%
Netscape.com* 18.0 $3,500 $3,750 $194 $208 7.1%
Excite 18.2 $5,063 $5,369 $278 $295 6.0%
Time Warner 12.2 $1,650 $1,750 $135 $144 6.1%
AltaVista (CPQ) 11.2 $1,000 $1,250 $89 $111 25.0%
TOTAL 200.1 $62,285 $69,961 $2,456 $2,752 12.0%
AVERAGE 25.5 $6,229 $6,996 $246 $275 12.0%
MEDIAN 21.0 $3,704 $4,109 $174 $199 11.0%
) 1999 internet.com *pmv=estimated private market value for website only; users, media metrix

You begin to see the trend I predicted in January: consolidation of traffic/services/brands. On tap for possible IPO is Compaq's AltaVista unit, which has been on a buying binge of late. First Shopping.com and the ZIP2, for $305 million by our estimates. I think Compaq must go a step further and buy community-commerce-content of some sort.

PC maker Gateway (NYSE:GTW) isn't sitting still in this space either. It just acquired 19.9% in computer etailer NECX for $21 million with options to acquire more. That looks cheap in our view since NECX reportedly generates $10 million revenue per month--that's a 1x multiple valuation. It also implies Gateway's distribution, if valued, could be make up for the low multiple.

Gateway also says it will give away free Net access for a year to customers. Gateway or DELL could do that and crush FreePC.com before the service gets off the ground. Net access in exchange for some profile info is coming in a big way, and the box makers may lead the charge.

That also affects AT&T-TCI-@Home-Excite, AOL-Netscape. In fact, it affects every Web site's business model if the box makers become the gateways, something I pondered in ISR early last year. Driving that is the breaking of Microsoft's control of the desktop display thanks to the anti-trust squabbling.


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